Bank of New York Mellon (BK) PT Raised to $82 at Deutsche Bank
Deutsche Bank analyst Brian Bedell raised the price target on Bank of New York Mellon (NYSE: BK) to $82.00 (from $80.00) while maintaining a Buy rating.
The analyst comments "Overall, we viewed BK's 3Q results to be solid, with adjusted EPS of $1.52 above our $1.41 estimate & Consensus of $1.42. We view core EPS at $1.49 excluding a 3c benefit from a lower tax rate. 3Q results were supported by top-line beats to Consensus, including higher NII than expected as well as slightly higher fee revenue. Expense control was solid and results are consistent with mgmt's desire to deliver positive operating leverage. See our 3Q24 Initial Thoughts for more on reported results While mgmt provided a 4Q NII outlook of ~$1bn (in line with pre-3Q Consensus of $994mn and above our $955mn estimate), more importantly in our view, mgmt also noted that it does not see NII as a headwind in 2025. We had previously modeled a 0.5% decline from 2024 to 2025 (now updated to just a 0.2% decline) while Consensus was modeling a 1.7% Y/Y decline. Expense mgmt continues to be solid, and mgmt. reiterated its expectation for flattish expenses this year, with some upside risks if revenue is higher, and also possibly from the Archer deal depending on timing of closing. This said, we do not see mild expense growth (such as the 1% we are modeling for 2024), as an issue given our view that BNY will generate close to 300bps of positive operating leverage this year, much higher than initial expectations. Mgmt. also discussed progress on its de-siloing and conversion to a platforms model, and its confidence on future cost control that could enable delivery of annual positive operating leverage in most macro environments. For more detail on our longer-term view of this dynamic for BNY, please see our report on 9/23, in which we we upgraded shares of BK to Buy. We reiterate our Buy Rating with this report and are raising our price to $82 from $80."